212 F.3d 20 (1st Cir. 2000), 99-2249, Almond v. Capital Properties, Inc.

Docket Nº:99-2249
Citation:212 F.3d 20
Case Date:May 08, 2000
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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212 F.3d 20 (1st Cir. 2000)




No. 99-2249

United States Court of Appeals, First Circuit

May 8, 2000

Heard April 6, 2000

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Gerald J. Petros with whom Christopher R. Bush, Charles D. Blackman and Hinckley, Allen & Snyder Llp were on brief for appellants.

Joseph S. Larisa, Jr. with whom Claire Richards, Executive Counsel to the Governor, was on brief for appellees.

Before Boudin, Stahl and Lipez, Circuit Judges.

Boudin, Circuit Judge.

Defendant-appellant Capital Properties, Inc., owns a garage at the railroad station in Providence, Rhode Island. The garage exists because in 1982 various parties, including the Federal Railroad Administration ("FRA"), the State of Rhode Island, and Capital Properties' predecessor-in-interest entered into an extensive "cooperative agreement" to relocate the station; and, as part of the agreement, the FRA agreed to pay 50 percent of the cost of a new garage.

FRA and Capital Properties' predecessor-in-interest also entered into a subordinate agreement concerning the operation of the new garage parking facility. A crucial paragraph of this "parking agreement" provided as follows in paragraph 6(b):

Except as provided in subsection (c) below, FRA or its designee shall have the right of prior approval of any changes in public parking rates. Any request by P&W [Capital Properties' predecessor-in-interest] for such a change shall be accompanied by appropriate justification. FRA or its designee shall not unreasonably withhold approval of such a request if the interests of intercity rail passengers are not adversely affected by the requested change.

Subsection (c) permitted the garage operator to increase rates for parking for a period of less than nine hours, decrease rates for a parking period of nine hours or more, and regularly increase all parking rates in equal proportion by a percentage keyed to the percentage increase in the Consumer Price Index since the last rate increase.

Although the state was not a signatory to the parking agreement, it was a party to the cooperative agreement, a provision of which contained a promise by Capital Properties' predecessor "to comply fully with the terms of [the parking agreement] attached to and made a part of this" cooperative agreement. This incorporation clause also permitted the FRA and the garage operator to amend the parking agreement by themselves, subject to review and comment by any other affected party; but there is no indication that paragraphs 6(b) and (c) have since been amended.

When the garage opened in 1988, rates for all rail passengers were apparently set below market rates. Monthly passes for Providence/Boston commuters were originally sold at a discounted monthly rate of $40 but rose over time to $80 per month. In late September 1999, Capital Properties announced that it was eliminating the monthly discount for commuters, effectively raising the rate to approximately $200 per month. Capital Properties did not seek the FRA's permission before instituting the rate increase and apparently has never claimed that the increase could be justified as a CPI adjustment under subsection (c).

Rhode Island Governor Lincoln Almond and the Rhode Island Department of Transportation (collectively, "the state"), then began this action in state court to

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enjoin Capital Properties' alleged violation of its contractual obligation to seek FRA approval for rate increases, and Capital Properties removed the case to federal court. The state sought temporary relief and, after a hearing on October 4, 1999, the district court determined to enjoin the increase on the ground that Capital Properties had failed to seek the FRA's approval (a TRO was issued on October 22). After the hearing, Capital Properties submitted a request to the FRA seeking approval of the increase, the state objected to the request, and, while the matter was pending before the FRA, the district court held a further hearing on October 26, 1999, and ordered from the bench:

I will grant the request for a preliminary injunction that precludes Capital Properties from raising the parking rates unless and until it obtains the approval of the FRA or alternatively unless and until it establishes that the FRA has unreasonably refused to give approval or has failed to rule on the request within a reasonable period of time.

Three days later, on October 29, 1999, the FRA in a letter denied Capital Properties' request. The letter said that granting the request would inflict large rate increases on passengers commuting between Providence and Boston, that passengers in this category were regarded by the FRA as among those whom the parking agreement was importantly designed to protect, and that the large increase had not been adequately justified. The letter said that the FRA was willing to consider justified increases and suggested that the matter be resolved through negotiations rather than through litigation. 1

In the meantime, in the district court, Capital Properties filed a...

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